Housing market: Foreigners buy up the countryside, rents in Budapest cheapen

In the fourth quarter of 2023, Zala County in Hungary had a substantial share of foreigners flock to its housing market. The county is not in a unique position: in three regions of the country, the proportion of non-Hungarians in the housing market has reached around 20 percent.

Foreigners are prominent in the housing market of these regions

The share of foreigners in the housing market in Zala County hit a record high in the fourth quarter of 2023, Telex.hu reports the analysis from the Hungarian National Bank (MNB). The latest data shows that 21.1 percent of home buyers in the county were foreigners at the end of last year.

Somogy County and the inner districts of Pest are also popular among foreigners. Still, interestingly, the share of foreign buyers in the housing market has declined somewhat in these two regions. Even so, almost 1 in every 5 buyers were non-locals in the case of both: 17.8 percent in the inner districts of Pest and 19.4 percent in Somogy County.

By comparison, Budapest’s proportion of foreign buyers was 7.6 percent, while in Hungary’s national housing market, it was only roughly 6 percent.

According to the Hungarian National Bank’s figures, housing prices in virtually all types of settlements saw a moderate increase at the beginning of 2024. However, the bank highlights that while foreign buyers are contributing to the rise in prices in the housing market of Hungary, they are still not the main culprit behind the hikes. Instead, speculative housing purchases are the ones that most affect prices.

Rent price increases slowed in Budapest but shot up in other cities

Rent prices have continued to rise at a higher pace than house prices, the MNB analysis highlights, but have slowed down compared to 2022.

In Budapest, for example, in the fourth quarter of 2022, the growth rate of rents was at 22.8 percent. In Q4 of 2023, on the other hand, the rate has gone down to 12.2 percent. Similarly, the national average growth in prices slowed from 21.4 percent to 12.6 percent in a year.

As for 2024, Index.hu looked at the real estate market in districts XIV and XVI of Budapest, illustrating the changes in the capital’s rental market at the beginning of the year through these two examples. It found that the hike in rental prices, which had been going on for several months, had come to a halt in the spring of 2024.

However, in terms of payments in April, the country and the capital followed different trends. While rents rose by an average of 0.8 percent nationwide compared to March, they fell by 0.5 percent in Budapest, according to the KSH and ingatlan.com rent index.

Moreover, there are also differences when it comes to Budapest: the inner districts of Pest saw a 1.8 percent monthly decrease, while rents of properties on the hills of Buda rose by 1.4 percent. The mean monthly rent in the capital was HUF 270,000 (EUR 695) in May. In the most expensive districts (II and V), the average monthly rent was HUF 380-400 thousand (EUR 979-1030). Within the capital, only in the XV, XX, and XXI districts did the average monthly rent remain under HUF 200 thousand (EUR 515).

“This year’s double-digit rise in earnings and incomes has now been priced into the market, but tenants are finding it difficult to afford significantly higher rents. This has led to a significant slowdown in rental growth nationally and a turnaround in rents in Budapest, where rents have been falling every month. Overall, April saw a correction of the brisk price increases seen in the first months of the year,” László Balogh, Chief Economist at ingatlan.com, commented on the April data.

“One reason why rents react so quickly to changes in market demand is that landlords can lose hundreds of thousands of euros if their rental property sits empty for weeks. This is now putting tenants at a disadvantage,” he added.

Debrecen took the title of the most expensive big city in the countryside, with average rents of HUF 240,000 (EUR 618) a month. Here, prices have risen by an average of HUF 20,000 (EUR 50) per month, so much so that the mean rent in Debrecen is higher than in nine districts of Budapest. The combined average rent in the county seats was HUF 150,000 (EUR 386) , illustrating how high averages in the city are.

Debrecen is followed by Székesfehérvár, Győr, and Veszprém, which have average monthly rents of HUF 180-190 thousand (EUR 464-490).

Read also:

• Shocking Trends: Cost of rent in Budapest and nationwide goes through the roof
• Hungarian real estate boom: Surge in prices, population explosion and hotspot shifts revealed!

Source: Telex, Index, MNB